New contributor Frugalist explains how stoozing enables him to supercharge his savings. And if those words make no sense to you then luckily we’ve got 2,000 more where they came from…
Never get into debt and never gamble. Those were the only two pieces of financial advice my mother ever gave me.
Unfortunately by my late teens I’d figured out how to profit from both. It caused no end of horror when the logo-covered post began to arrive.
Today I’m much closer to that maternal ideal though.
I save, I invest, and I never miss my debt payments.
Oh yes – I’m still in debt.
However I’ve got debt on my terms now. I pay no interest, and rather than gambling with my borrowings I’m putting the proceeds into a sure thing – savings that pay me interest.
This is called ‘stoozing’ and no, I didn’t invent that term while smoking something funny.
Instead I must give credit to the stoozing pioneers in the 2000s. Some of you may even be grey enough to remember discussion board user Stooz, after whom the practice is named. (The Investor is ancient enough to confirm this).
In those halcyon early days, I was too worried about school and finishing The Elder Scrolls IV: Oblivion.
But I caught on eventually – and to this day I remain an ardent credit card stoozer.
What is stoozing?
In essence, stoozing means borrowing money at 0%, then stashing it somewhere else that pays more than 0% as interest.
You can then sit back and enjoy the fruits of your arbitrage:
- You borrow £50,000 at 0% and stick it in an account paying 5% interest
- That’s £2,500 in your pocket every year
I can already hear the complaints!
What about your credit file? What about tax? Where is this magical 0% credit card with a £50,000 limit?
Okay, okay – it isn’t quite that easy.
But it is completely true that I’ve meaningfully supplemented my own income with relatively little effort through stoozing this way.
Tools of the stooze
There are three kinds of credit cards that make stoozing a reality.
First is a 0% spending card. With these, you spend on your 0% card as usual until you reach your credit limit, making minimum repayments as you go to avoid paying interest. You put the cash that would have gone on spending into a savings account instead.
Second is a money transfer card, where you move money from a credit card into your bank account for a one-off fee.
Third is a balance transfer card. Here you take debt from one credit card and shift it onto another – usually for a small transfer fee. Balance transfer cards are great for rolling over the debt that you’ve already built up.
Wealth warning Remember, I’m moving this debt into cash savings, so net-net I’m not actually going into debt. I can always repay my card balances with my accumulated savings, hence the risk of responsible stoozing is very low. However if you don’t trust yourself to be completely disciplined then don’t go near stoozing with a bargepole.
How to get started with stoozing
The process is best illustrated with an example.
Let’s imagine that Jane gets a 0% spending card with a credit limit of £11,000. After a year of using this card for normal spending – and saving the cash she’d otherwise have spent – she has a balance of £10,000 on the card and £10,000 in her savings account.
Jane then gets another card. This time it’s a 0% money transfer card. With this she can transfer £12,000 to her bank account with a 2% fee (£240).
At this point, Jane has £22,000 of cash savings, and is down £240 from the transfer.
But over the coming year, she makes 4.5% in her savings account. Like this Jane earns herself £990, leaving a £750 profit for the year.
Even if Jane earns an above-average £40,000, this is more than a week’s net wages.
When her credit cards start to come towards the expiration date of their 0% rate period, Jane can get a balance transfer card, to move her debts to the new card. This keeps the game going.
At the more extreme end, I’ve even stoozed with a personal loan, when borrowing rates dipped below 3%.
Fees and taxes are a drag
Typically, you pay lower pro-rated fees on shorter deals. Below I’ve set out how this affects the annual profit, based on some of the currently available deals on the market.
I’ve assumed a £10,000 balance transfer with the cash saved in a 4.5% savings account, which earns £450 annual income.
| Transfer Fee | Months | Annualised Fee | Annual Profit |
| 2.99% | 34 | 1.06% | £344 |
| 1.49% | 22 | 0.81% | £369 |
| No fee | 14 | 0% | £450 |
You can see that short-term cards have the most profit potential, in exchange for the extra hassle of shorter timescales.
The long-term cards are still worth a look though. With these you can avoid repeated credit checks, reduce the hassle involved with transferring balances, and keep that stoozed capital working for you for a longer period.
Either way, a single card could net you around £1,000 profit over three years – or more if you’re happy to renew every 14 months.
Don’t forget about tax
You’ll probably pay tax on your savings interest:
- As a 20% basic-rate taxpayer you can earn £1,000 tax-free from savings
- As a higher-rate 40% taxpayer your allowance falls to £500
- At 45% you are considered so rich that you get no allowance
Here’s what each bracket of taxpayer would earn on three different savings balances at 4.5% after income tax is deducted, taking into account the personal savings allowance:
| Savings | 0% | 20% (£1,000 allowance) | 40% (£500 allowance) | 45% (No allowance) |
| £10,000 | £450 | £450 | £450 | £248 |
| £25,000 | £1,125 | £1,100 | £875 | £619 |
| £50,000 | £2,250 | £2,000 | £1,550 | £1,238 |
Even as a higher-rate taxpayer, a £10,000 savings pot at current easy access rates won’t attract tax. So just dipping your toe into the stoozing waters may be appealing.
But to push the envelope further you’ll need to explore tax-free savings products.
My preference is Premium Bonds. But also consider gilts or even a standard cash ISA (assuming you won’t otherwise be filling your stocks and shares ISA with, um, stocks and shares).
Stoozing and emergency funds
Here’s another angle to think about for anyone chasing financial independence.
Some gurus argue against emergency funds if you’re striving for FIRE, on the basis that keeping any capital in cash creates too great a drag on total investment growth.
For instance, if you start your FIRE journey by saving up a £40,000 emergency fund in a cash account that only matches inflation – and only after that’s in place go on to take another 20 years accumulating your investments – then if those investments earn a 7% annual real return, you’ve missed out on £115,000 of growth on the money that’s stuck in your rainy day warchest.
On the other hand, if you skip the emergency fund and lose your job when the market is down, then you could do even worse by needing to withdraw from your investments at a low ebb.
However I think stoozing can act as a middle ground.
Rather than funding your £40,000 emergency fund at the expense of your investments, you could instead fuel at least a part of the fund with 0% credit card debt.
Ideally your debts will be structured as a ladder (effectively the opposite of a bond ladder).
Like this, chunks of 0% debt come due each year and can be renewed, rather than the entire amount coming due in the same year, with the risk that lenders won’t cover it all.
This way if you lose your job, you can spend your stoozed cash before needing to touch your investments. This should help you avoid selling your equities at the bottom.
Proceed with caution
Of course my suggestion isn’t a get out of jail free card.
If you burned through your entire emergency fund over the course of a year, then I reckon you’d prefer not to also have £40,000 of credit card debt to think about.
But on the flip-side, you’re protecting yourself against most short-term emergency scenarios, without bearing the full cost of an emergency fund. You should also have a larger investment portfolio to sell from if needed – even if it dips from time to time.
Why not just pay for any emergencies with a credit card if you need to?
Well, I’d argue that you can’t rely on credit cards or lines of credit in a crisis, because lenders can take them away when you need them most.
With my suggestion you’ve taken on the debt already. The lenders gave you the money cheaply when you were less of a risk.
In contrast they probably wouldn’t want someone who has lost their job to owe tens of thousands on credit cards…but tough luck. They’ve already made their decision and you’ve already borrowed the money.
Finally, if you are on a very secure professional path, like to live by the seat of your pants, and you eat risk for breakfast, then you could go one step further and eschew savings accounts altogether. Just throw your 0% proceeds straight into the market.
That’s not for me though. It exposes you to too many ways for things to go wrong – and potentially all at once.
Perhaps my mother did get to me after all.
Other downsides to stoozing
On the subject of risk, I’ve heard a drumbeat of a thousand ‘buts’ in the background.
You’re right! There are lots of other negatives to think about before stoozing.
A big one is mortgage lenders. Here you’re at the whims of computer-driven decision machines, who look at your credit file and care little about the interest rate of your debt.
If you’re holding more credit card debt than your annual net salary, they can start to get a bit jumpy. (And not all of us can talk our way into getting a bespoke mortgage.)
One option is to time the ending of your 0% periods around your mortgage renewal date, so you pay them down to a level that lenders don’t care about. (For me this has had the added bonus of reducing the anguish of my long-suffering mortgage broker.)
If you check a couple of ‘How much can I borrow?’ tools from the big lenders, you can get a picture of how much 0% credit card debt you can take on without it wrecking your maximum mortgage borrowing amount.
Another option is to keep renewing your mortgage with the same lender.
This enables you to secure a more competitive rate than the standard variable rate, but without you having to freshly pass the underwriters’ desk.
On the record
Securing other credit cards and overdrafts can be even more pesky for the same reasons. Again they seem to me to get especially anxious when credit card debt exceeds annual net salary, but it’s not an exact science.
Of course, as dedicated Monevator readers we’d never be looking to get a credit card to actually amass proper Pay Interest To Have Stuff Now debt.
But suppose you wanted to get into the credit card points hacking game?
Someone who could be the perfect candidate for the latest air miles reward card with a juicy £100 sign-up bonus, say, may well be rejected if their credit file makes it look like they’re carrying the same debt as a small developing world country.
In this case you might write letters of appeal to the underwriters, boasting about your meaty pile of offsetting Premium Bonds. Really – I too was surprised to discover that this can work.
But it takes a pretty special offer to motivate me to try.
Should you start stoozing?
I wouldn’t blame you if you said stoozing isn’t worth the hassle.
But personally I’m expecting to make around £3,000 in net profit this year. And even in the years of rock bottom rates, I still found opportunities.
To me that’s worthwhile money. All made by doing something I think of as fun.
In true Monevator fashion, I’ve even ploughed my stoozing profits into my investment portfolio. This supercharges the returns from stoozing even further.
The big downside – one that I have no argument against – is that people will think you’re weird if you let it slip that you have 23 credit cards.
So try not to discuss stoozing at parties.
Especially if my mother is there.
Good read!!
I do it slightly differently, whereby I do my bigger spends as and when required on a 0% card so I don’t need to use savings. Then just pocket the interest. Golden rule of course is you must have the savings to cover each spend! Averaging around £75 a month for doing nothing.
My personal favourite is when the Credit Card and Savings are with the same bank, they’re literally paying me to borrow their money. Feels like a win!
Just make sure to note dates of the Promotional Expiration!
You do NOT want to miss it as it will likely wipe out all the gains!
I have 48k available credit cards and have been stopping with about 16k. The down fall is the minimum payments every month. That does deduct from cashflow. I was paying around 350 per month for that 16k I have now dropped down to 8. Which is a minimum of 200 per month.
It is mentally draining to keep on top of for some too. I will pay off my 8k in 18 months but I am not sure I will keep going as I can put that monthly money straight into my ISAs
For me I have more value putting my spend through airline and hotel credit cards to get points and BA companion / upgrade tickets.
Yes on the mortgage advisor front. Wish financial advisors and mortgage advisors would speak to each other.
Had approx £7k on 0% credit from installation of solar panels on our house, before the FiT rates were cut in 2015, got approx £2k pa in direct payments and cost savings. Financial advisor confirmed was doing the best thing, which enabled me to save and invest elsewhere.
Come moving house last year, mortgage advisor highlighted ‘bad’ debt, despite me showing it was on 0%, being transferred and meeting the minimum, would have a negative effect on our ability to borrow. Hated paying that off as it meant I then didn’t have the cash to invest elsewhere or have an emergency fund. Mortgage advisor didn’t want to know the reasons.
Just installed new panels on 0% credit card, twice as big system and 4 times more efficient, plus battery. Now getting approx £200 pm in profit from the panels via savings and feeding back to grid, which can be reinvested elsewhere.
@Leo
I recently took the maximum money transfer on one of my cards (needed to buy something big but didn’t want to sell gilts that will have a higher yield at maturity). But they don’t let you take the full amount of credit so I use that card to spend (0.5% cashback too!) and pay back that additional spend each month (it is more than the minimum payment required) so I get to keep the full value of the money transfer until the deal ends.
I have a different (less extreme) credit card trick.
Have two credit cards with billing periods half a month apart. For example, card A’s billing period starts on the 1st of the month and card B’s billing period starts on the 15th of the month.
In the first half of the month use card A and in the second half of the month use card B. This lengthens the average time between making a purchase and actually paying for it (we’re assuming here that you pay off each card in full each month).
Can’t say I appreciate this new direction for content. Looking to expand your appeal to a different audience?
Interesting.
I did this a couple of times with an offset mortgage (Virgin Money) and varying 0% 0 fee transfer cards about 15 years ago, and it saved me quite a decent amount. However, you do need to be the sort of person thats ok with having debt, albeit coverable by savings. Too stressful for me to keep on top of now!
I’ve just started stoozing again partly by fluke. Two cards were about to need clearing of the debt for our holiday in July when I saw my bank advertise its transfer card. So I’ve opened one. We’ll be paying for the holiday slowly over thirty months, with a lump to clear at the end.
Meanwhile the tax-free lump sum I’d withdrawn from my SIPP (with the new IHT rules in mind) won’t be used to clear the holiday debt but instead to open a cash ISA for my wife. Not “a standard cash ISA”, mind, rather a flexible cash ISA. Such a useful tool, the flexible ISA. (And best to open one now before La Reeves takes a hard look at cash ISAs.) Though I suppose I could split the money with one fixed term ISA maturing in thirty months and one variable rate ISA, preferably one where we could withdraw the interest every month if that were to suit us better. Hm, maybe.
This wheeze should be sustainable because we don’t expect to take an expensive holiday next year. Now all I need is to find a tax-efficient way to draw income from my SIPP. I’m pondering an idea for that too. Any suggestions welcome.
@Zaka thank you. I agree, that is certainly the easiest way to do it and I’ve done it in the past. These days I like double-dipping with credit card rewards as well, as @CC mentions those can be quite lucrative so I use rewards cards and then balance transfer onto 0% cards. Totally agree on the expiry dates, a good spreadsheet is very handy!
@Leo thankfully most of mine use the 1% model for minimum payments, for a while Barclays used (IIRC) 2.5% which was a real drag. I’ve had to juggle money around in the past to make sure there’s a decent float in the current account
@JDW I had a really frustrating experience trying to remortgage many years ago, as I had a sofa on 0% finance. The adviser from the bank quizzed me about it for half an hour, wanting to know if I’d buy a new sofa when the finance was paid off etc. We sailed through affordability, but I still got the third degree. Since then I’ve used a broker and been quite careful about the amounts of timings of debt. I do wonder whether a private bank might do better at marrying up the info, but I don’t have the assets to qualify for a true PB and I doubt I’d come out ahead after fees.
@Owl that’s a handy trick, I did get a bit annoyed recently when I put a big transaction through on a card and realised I’d done it right at the end of the billing period so barely got any interest free time!
@Tom offset mortgages are the ideal scenario for this, but the market seems to have really dried up of late. I don’t disagree on the stress, I think you have to enjoy it at least in a small degree for it to be worthwhile!
A little different, but credit card related. I’ve been fortunate enough to have a windfall in the past which allowed me to pay off my mortgage. Turns out that my mortgage provider accepted my rewards credit card and my credit card provider treated the payment of the mortgage like any normal payment.
That was a way to rack up some serious points!
If you do go down that route, do a small test transaction first, check that you’re not being charged extra by either end and make sure you’re not paying an early repayment charge.
@Onion, was this just a one off payment made when phoning them?
I currently have three zero percent cards on the go totalling around £31K and have been stoozing for quite a few years too. Cards gets replaced when the zero term comes to an end.
The balance of the cards gets transferred to a savings account linked to my offset mortgage and therefore saves me money each month off the mortgage payment. This is good value as mortgage rates are usually higher than savings rates and so the amount saved is greater, without any risk.
Stoozing can be well worth doing – just remember to set calendar reminders for expiration dates of current deals otherwise all the hard work will be undone if you forget!
@all — Thanks for giving @Frugalist a bunch of thoughtful comments to chew over for his debut article!
@Andris Nestors — We’ve made numerous runs at trying to work personal finance into the Monevator mix over the years. It’s not really to appeal to a different audience, more to broaden what we cover here.
I believe there’s a gap somewhere between Reddit style personal finance gaps ‘hack’ discussions and the vanilla money-related articles in the mainstream media. Frugalist’s article is a good example of what I mean, and it’s generally been well-received. 🙂
The focus on Monevator will always be investing and financial strategy with a bias towards achieving financial independence.
But we have written — quite literally — around three million words about that over the past 17 years. And all but the premium membership ones are there in the archives and free to read. (The membership ones are in the archives too, of course, if one has access – Mavens and Moguls 🙂 ).
So I think the content mix can easily handle and indeed benefit from one or two useful personal finance related articles a month.
Cheers!
If you want to up the risk somewhat, you are able to buy Gold CGT free coins with 0% credit cards.
Somewhere like Atkinsons Bullion the spread on spot price + premium can be a as low as 2%. You can then often sell back to dealers at Spot.
I was planning on holding for 24 months
As a leveraged play on the price of Gold going up. I bought £35,000 worth of Britannias in December and chickened out and sold in Easter after the price rose so dramatically, I am now stoozing the amount.
I was doing this back in the early 2000s, transferring the balance into my offset mortgage. The mortgage’s interest rate was 6.75% and I think around 10% of the mortgage was offset via credit card loans. So it was quite a reasonable saving in interest.
It doesn’t seem to have been highlighted above but the main advantage of doing this with an offset mortgage is that you won’t have any tax to pay.
@CC
I made the payments online. The mortgage company had a limit of £12k per transaction. We paid that on my credit card, then on my partner’s supplementary card on the same day. Then we paid off the balance of the card. It took a couple of days to register so there was credit to spend on the card again, and then we did another two £12k transactions. Kept going until the balance was cleared. A bit bonkers, but worth getting a points based rebate on, for sure.
Payr will effectively do a money transfer for 1.99%. It is marketed for paying rent but in reality you can send cash to any bank account (not your own). They are probably taking a skim on whatever their own payment processing fees are.
Curve Fronted and Bluechain will do any balance transfer for 2.50% (i.e. use your new 0% card to pay off your old card).
There is a whole ‘manufactured spending’ crowd who find weird ways to pay by credit card (normally to top up an investment account or prepaid card) and get it withdrawn to a bank account (rather than refunded back to the card). The last one I saw was more mainstream and involved paying by card into a Revolut investment account and being able to withdraw to a bank account.
You even have people setting themselves up as ‘sole traders’ with SumUp and effectively paying themselves for the 1.69% payment processing fee. You don’t need a payment terminal any more as there is an app that works with NFC.
seems a shame not to mention mule cards. Cards that can be used with no fees to “create” a balance with a money transfer. You can then use a traditional balance transfer card to switch it to 0%
Halifax Clarity / MBNA are my trusty favourties.
Waaay back when the government was flogging off nationalised industries at knockdown prices, I used to participate by obtaining a cash advance on a Visa credit card, incurring a 1.5% handling fee (Mastercard worked differently and wasn’t suitable) and zero interest if paid within a certain number of days from the next statement date. When the payment was due, I selected an appropriate credit card (by statement date) and transferred the debt onto that, incurring another 1.5%. In the meantime, I’d sold the shares at a profit and when the money had cleared, repaid the ‘loan’. This was at the time when the BoE interest rate was 15%. I calculated that my APR was around 12%. And no faffing around trying to persuade someone to lend me the money.
I remember one occasion when I went into a bank and asked to transfer a debt from one card to another by way of virtual cash advance. The woman on the adjacent position chirped up with “That’s illegal.”. So, I asked for a cash advance and said I’ll hand the money back to pay the debt. They decided that the virtual cash advance worked for them at that point.
I’m not normally interested in non-investing topics, so I quite enjoyed this article and the worked examples even though I won’t be following this up (avoidance of debt is too ingrained!).
@Zaka I love your idea of profiting from a bank by placing their money into their own account
I have stoozed and held 0% debt (approx 3% BT fee) for a longish (15+yrs) time.
It’s done me well BUT the one glaring omission here (if people contemplate getting into this for the first time) is mortgage affordability checks. If you have £12k credit card debt, they apply their own short repayment figure to clear it e.g. 6months at £2k pcm. So you have a MUCH bigger income bar to jump for affordability.
I make sure I have cleared the stooze balance 3 months before affordability checks are needed e.g. additional borrowing, changing lender.
Prior to finding this site I used to be in quite significant debt on credit cards. Using the advice here and YNAB I cleared all my debt over a couple of years, making use of several 0% credit cards. Now I’m in the process of building savings and I’ve carried on using 0% cards to boost the interest I’m earning. Done well it is free money with no risk. But without discipline could easily be a slippery slope back into debt. Mortgage is fixed until mid 2027, so I’ll clear all the credit cards 6 months prior – as we did prior to fixing in 2022. Our broker seemed genuinely surprised we had zero debt apart from the mortgage.
Just to add; with the mortgage we fixed at 2%, as rates increased rapidly during our application we increased our borrowing and have stoozed the extra in higher interest accounts. We borrowed from Clydesdale and saved in Virgin ISAs…. All part of the same group. Doubt we’ll be so lucky again when the fix ends.
Based on this article I have taken out an hsbc 0% (20 months) interest credit card, that has £25 cashback if I spend £500 in 60 days. Plan to use it as in same manner as this article suggests, spend on it and put the same amount of money in a savings account each month. I always use cashback credit cards (pay off balance every month) and this is just a way to boost my cashback %, albeit I will pay or transfer the balance after 20 months now. I wouldn’t recommend this to an undisciplined saver though.
I did initially think of taking out a £50k loan, putting it in premium bonds, and doing a balance transfer for small fee (equivalent to first years expected return). But realised you can’t do balance transfer from loans to credit cards, probably for the best given the higher APRs on credit cards that apply if you don’t clear the balance in time (although I would do, others may not).
Great article!
I recently got into the world of stoozing and managed to stooze £42k within 6 months which helped pay off my mortgage so I don’t move onto the retail rate as I sell.
That stooze pot is saving around £280 per month post-tax so it’s been well worth it! And I’ve not had to sell any investments to get there.
I’m kind of locked out from applying to new cards now as I did too many in one month. The best card for me to allow this (as I don’t spend much,) was the Halifax Clarity, they offer money transfers for 0%, so you can money transfer to your bank and then use a 0% balance transfer card to clear the debt, and you can do it multiple times – neat hack to quickly stooze!
I wrote some code to send me a Discord notification whenever a 0% card term is coming to an end (and 1 month before that date too,) paired with a Google calendar, so I can rest easy.
What’s next on the article agenda – Matched Betting maybe? 🙂
Interesting read, and really great to have a new contributor added to the Monevator stable! If I were young and hungry, I would definitely do this because I would have found this sort of stuff great fun in my younger days (just me..?). But I’m older, lazier and much richer these days, so I enjoyed reading about it but wouldn’t have the patience to actually do it.
Glad Monevator finally have an article on Stoozing! I’ve been doing it for years. I’m currently stoozing around £17k across three credit cards with 90% of the money put in easy-access savings and 10% invested in an ‘all-weather’ style portfolio via Invest Engine ISA. The interest gained on easy-access savings account isn’t great but current returns from the investment portion of the stooze pot has provided a significant boost.
I’d be interested to know whether many Monevator readers would be prepared to risk putting a portion of the stooze money in investments. And if so, how much as a percentage.
Suppose that you keep your stoozed capital in, say, cash ISAs. What you effectively have is a leveraged cash investment. Since cash is very low risk – in nominal terms – it has a low expected return. Stoozing in effect amplifies that return. Does it really do so without adding to the risk, though?
Apart from forgetting when your deal runs out is there really no other increased risk? After all, if you find the monthly payments too onerous you can just withdraw some of the cash from the ISA and pay the debt down a bit.
I really must look at some other stoozing opportunities. What if I stoozed some capital and stuck it into (high risk) VCTs? Or EISs? Could that make any sense? Tax back and “free” capital: tempting. But bonkers? Why leverage an already risky investment?
As I’ve already maxed out both my ISA and my personal savings allowance, I’m planning to buy low coupon UK gilts. After that, will probably start stoozing, and keep an amount higher than the credit card balance invested in gilts maturing before the 0% period ends.